Medicare Part D Update: Avoiding a New Liability for Nursing Homes

As is too often the case, federal legislation has set up a system that did not fully take into account the unique environment that exists in nursing facilities. Medicare Part D is a prime example. In addition to difficulties imposed by the unique and already heavily regulated environment of nursing facilities, these regulations are now in conflict with the new Part D federal legislation.

The basis for this conflict is Medicare Conditions of Participation that requires skilled nursing facilities (SNFs) to provide all of the care and services that are medically necessary to their residents in a timely manner. As a result, SNFs have a responsibility to ensure that each resident receives every medication ordered in a timely manner. This was not a problem pre-Medicare Part D, when most prescriptions were being covered without restriction by state Medicaid programs. Post-Medicare Part D, however, a new entity was added that oftentimes restricts timely delivery of medications to residents.

The mechanisms most likely leading to restriction involve nonformulary medication, off-label use, quantity limits, and excluded medications. To best illustrate this problem, we will walk through several cases that SNFs are likely to encounter, especially now that the special transition period has ended. This period, which ended March 31, forced prescription drug plans (PDPs) to continue to provide coverage for medications that a member had been receiving prior to joining their plan. For most nursing home residents, this meant that medications they had access to through Medicaid were continued through March 31, but after that date, it required going through the appeals and exceptions process, changing medications, or changing plans to get access.

The dually eligible—those with Medicare and Medicaid—and those living in long-term care (LTC) facilities have the ability to utilize a Special Enrollment Period (SEP). Through the SEP, LTC residents who find themselves in PDPs that do not provide the medications they need can change plans. The new plan that they choose would become effective the first day of the month following their enrollment, with the previous plan continuing coverage until that time. In some cases, it may be easier for nursing home residents to change plans rather than go through the appeals and exceptions process. If the PDP does not provide coverage for a medication ordered by a nursing home physician, the nursing facility would become responsible for providing the medication, as is the situation in the cases presented below.

Each of the following cases points out the financial liability a nursing facility will find itself under if it is not taking a proactive stand in assuring that residents are enrolled in the PDP that offers access to their needed medications. In addition, a nursing facility’s prescribers need to write orders within the scope of the PDP, or be prepared to argue through the appeals and exceptions process to gain access to the needed medication. Here are four cases in which the nursing facility would find itself financially liable for ensuring access to ordered medications:

Case 1:
NONFORMULARY MEDICATIONS
Dr. Smith has ordered a medication for Mr. Johnson, but his PDP does not cover it. The physician is unwilling to change the order to what the PDP considers the appropriate medications because Mr. Johnson has tried and failed the medications available through the PDP. Mr. Johnson is dually eligible, so he does not have the ability to pay for the medication. As a result, the facility may need to pay for the medication to ensure that it is available in a timely manner.

Case 2:
OFF-LABEL USE
Ms. Williams has moderate-to-severe dementia that is being controlled with two agents. Her PDP requires Mini-Mental State Examinations. Because both medications are not indicated given her level of dementia, the PDP refuses coverage of one of the antidementia agents. Again, if the physician deems both medications to be medically necessary, it would become the nursing facility’s responsibility if the resident cannot pay for the medication and the physician remains unwilling to change the prescription.

Case 3:
QUANTITY LIMITS
Dr. Leonard orders a 30-day continuation of Mrs. Jones’s sleeping medication. The PDP imposes a quantity limit of 14 tablets, refusing to cover the full month’s supply. The extra doses would become the responsibility of the facility if the family is unwilling to assist in paying for these ordered medications.

Case 4:
EXCLUDED MEDICATIONS
Mr. Redick has been well controlled with a benzodiazepine medication for his anxiety disorder. In most states, Mr. Redick would continue to obtain his benzodiazepine medication through the state Medicaid program. However, in states such as Tennessee, where the state has chosen not to cover any benzodiazepine for its Medicaid beneficiaries, Mr. Redick or the facility would be responsible for paying for the medication.

TROUBLING BEHAVIOR

While some nursing facilities will get “stuck” with paying for medications not covered by PDPs, others may try to develop strategies to avoid these payments. Still, others will undoubtedly push the envelope into illegal cost-shifting activities. One point of potential troubling behavior that the Centers for Medicare & Medicaid Services is examining involves nursing facilities that attempt to shift their Medicare Part A financial responsibility to other parties, such as Medicare Part B or a PDP under Medicare Part D. These schemes are important for medical directors to be aware of, because the liability for oversight in this area may extend to them. All of these schemes have a common foundation: Since nursing facilities are responsible for the cost of medications during the Medicare Part A stay, the facility may attempt to shift this burden to others.

There are some common illegal actions that nursing facilities may potentially attempt. In the first case, Mr. Glew has been taking an expensive oral cancer medication when he is admitted to a nursing home for skilled services. The nursing facility asks that his family obtain his medication from the community pharmacy under his Medicare Part D coverage. In another case, Mr. Jacobs had been taking an expensive oral cancer medication, which was started during his non–Part A nursing home stay. He is transferred to the hospital, and then to skilled services. The nursing facility takes the medication that was unused during his non–Part A stay in the facility for use during his skilled stay. Obviously, in both cases the nursing facility is financially responsible for all the medication utilized during the Part A stay. Any shifting of this responsibility is both illegal and dangerous for SNF residents. Medical directors need to keep a watchful eye over these inappropriate activities.

AVOIDING THE BILL

So how does a SNF avoid paying for those medications restricted by the PDPs? The answer, as with most difficult questions in geriatric care, requires a team. A Medication Management Care Team specifically dedicated to the issue of managing Medicare Part D should be established within every SNF. This team should include the director of nursing, medical director, consultant pharmacist, in-take coordinator, and any other staff member felt to be critical to this process.

By developing a Medication Management Care Team, a facility can avoid paying unnecessary bills, and instead focus facility resources on much more worthwhile pursuits, such as increasing nursing staff. This team will need to first ensure that residents are enrolled in PDPs that allow the greatest access to medications. Then the team needs to have systems in place to make sure that orders are written in such a way that ensures that prescription plans will cover medications in a timely manner.

It is only through a proactive team approach that nursing facilities can avoid being financially liable for providing noncovered medications. As in most situations, proper planning can help prevent poor performance that could cost facilities and their residents dearly.